Dollar edges lower ahead of Powell testimony; euro helped by German exports

investing.com:

Investing.com — The U.S. dollar slipped lower in early European trade Wednesday, in cautious trading ahead of congressional testimony from Federal Reserve Chair Jerome Powell which should provide more cues on U.S. monetary policy. 

At 04:30 ET (09:30 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.2% lower at 103.602, after falling from three-month highs over the past two weeks.

The dollar received a hit on Tuesday after data showed U.S. services industry growth eased in February, but losses are minor as investors await the start of Federal chief Powell’s two-day testimony in front of Congress.

Powell appears before a House committee on Wednesday, and a Senate panel on Thursday, and is expected to reiterate that policymakers will stick to a cautious approach in deciding when to begin lowering interest rates given persistent price pressures.

“We think Chair Powell may not be quite as hawkish as some think today and we see some downside risks to the dollar,” said analysts at ING, in a note.

That said, any losses are likely to be curtailed ahead of Friday’s keenly-awaited monthly jobs report.

Signs of continued strength in the labor market could make it harder for investors to shrug off concerns about how a stronger-than-expected economy could reignite inflation if the Fed begins easing too soon.

In Europe, EUR/USD traded 0.2% higher at 1.0873, with the euro helped by better than expected German trade data, raising hopes that the slowdown in the performance of the eurozone’s dominant economy may be coming to an end.

German exports rose more than expected at the start of the year, rigging 6.3% in January compared with the prior month, thanks to rising demand from European